476 B.R. 124
Bankr. D. Del.2012Background
- Chapter 11 debtors' plan trustee sued Vector for four preferred transfers totaling $29,920 during the 90-day pre-petition window (Preference Period).
- Plaintiff alleged transfers were avoidable under 11 U.S.C. §547(b); Vector asserted defenses under §547(c).
- PSA governed IT staffing services between AHM and Vector; payments were made within ~30 days after invoicing.
- Evidence showed Vector applied the four preference period checks to multiple old invoices and that timing matched historical practices.
- Trial occurred Sept. 23–Oct. 3, 2011; expert and lay witness testimony supported Vector’s ordinary course and new value defenses; the court ruled in Vector’s favor.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether transfers are exempt under §547(c)(2) as ordinary course | Sass | Vector proves ordinary course | Yes; transfers were in the ordinary course. |
| Whether transfers were made according to ordinary business terms under §547(c)(2)(B) | Sass | Vector’s terms align with industry norms | Yes; terms align with industry standards. |
| Whether Vector provided new value under §547(c)(4) to shield transfers | Sass | New value of $5,440 extended after payment | Yes; new value defense partially protects $12,920 payment. |
| Whether Plaintiff’s evidentiary challenges to the expert testimony are warranted | Sass | No; testimony admissible and weight goes to credibility | Denied; Sienkiewicz’s testimony admitted. |
Key Cases Cited
- Fiber Lite Corp. v. Molded Acoustical Prods., Inc., 18 F.3d 217 (3d Cir.1994) (broad industry norms govern ordinary terms under § 547(c)(2)(B))
- In re Elrod Holdings, 426 B.R. 106 (Bankr. D. Del. 2010) (ordinary-course defense includes timing and practice consistency)
- In re Color Tile, Inc., 239 B.R. 872 (Bankr. D. Del. 1999) (range-of-terms and industry norms govern ordinary terms)
- In re Forman Enterps., Inc., 293 B.R. 848 (Bankr. E.D. Pa. 2003) (broad interpretation of ordinary terms within industry norms)